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using-offtoa:assumptions:revenue-assumptions:sales-model:top-down [2016/05/26 19:37] 127.0.0.1 external edit |
using-offtoa:assumptions:revenue-assumptions:sales-model:top-down [2016/05/28 14:37] (current) mdavis |
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| ==== Why Model Sales? ==== | ==== Why Model Sales? ==== | ||
| - | Offtoa is a tool that produces and analyzes //pro forma // financial statements for your startup company based solely on your statement of business assumptions. One of the key assumptions will be how much revenue your company will generate by selling its product(s) to the intended market(s). The expression "Modeling Sales" means the set of assumptions that enable<php>echo $conf['comp_name'];</php>to determine how much revenue you will produce. | + | Offtoa is a tool that produces and analyzes //pro forma // financial statements for your company based solely on your statement of business assumptions. One of the key assumptions will be how much revenue your company will generate by selling its product(s) to the intended market(s). The expression "Modeling Sales" means the set of assumptions that enable <php>echo $conf['comp_name'];</php> to determine how much revenue you will produce. |
| ==== What is a Top-Down Sales Modeling Technique? ==== | ==== What is a Top-Down Sales Modeling Technique? ==== | ||
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| * Usually result in highly optimistic estimates. | * Usually result in highly optimistic estimates. | ||
| * Usually seem like they are entirely reasonable because the entrepreneur says something like "look, all we have to do is capture ½ of 1% of the market, and see how much money we will make!" | * Usually seem like they are entirely reasonable because the entrepreneur says something like "look, all we have to do is capture ½ of 1% of the market, and see how much money we will make!" | ||
| - | * No educated third party will believe your top-down estimates, nor should they. However, they are helpful in that they provide you with an absolute ceiling of reasonableness when you perform your bottom-up estimations. | + | * No educated third party (e.g., investors, lenders, board members) will believe your top-down estimates, nor should they. However, they are helpful in that they provide you with an absolute ceiling of reasonableness when you perform your bottom-up estimations. |
| - | * Some fools will believe these estimates because they are based on "market research." | + | * Some fools may believe these estimates because they are based on "market research." |
| Only a few top-down approaches exist; they are: | Only a few top-down approaches exist; they are: | ||
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| * Predict market penetration by year. | * Predict market penetration by year. | ||
| - | Note: Some of the above has been extracted from Davis, A., //Will Your New Start Up Make Money//?, Scrub Oak Press, 2014. {{indexmenu_n>2}} | + | {{indexmenu_n>2}} |
